Law:

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Section 184 of the Income-tax Act, 1961 [Corresponding to section 26A of the Indian Income-tax Act, 1922] – Firm – Position prior to 1-4-1993 – Registration for assessee firm was claimed on basis of deed of partnership – Tribunal held that there was a valid partnership formed expressly in manner it had been done in consonance with provisions of Indian Partnership Act, 1932, and further that said partnership was a genuine one – Whether in view of clear finding of Tribunal as to genuineness of firm and since there was no legal bar to formation of such partnership, registration to assessee firm could not be denied merely because there would be some loss of revenue – Held, yes FACTS On the basis of the deed of partnership and the deed of agreement, the registration was claimed for the firm. The ITO refused registration on ground that the deeds did not bring about any relation of partners among the parties to the deeds and there was no intention to act upon the terms of the same. The AAC upheld the decision of the ITO. The Tribunal considered the circumstances under which the partnership was formed and held that there was a valid partnership formed expressly in the manner it had been done in consonance with the provisions of the Indian Partnership Act, 1932, and further that the said partnership was a genuine one. On reference : HELD In view of the clear finding as to genuineness given by the Tribunal and since there was no legal bar to formation of such partnership, the assessee firm was entitled to registration under section 26A of the 1922 Act. Such a firm could not be denied registration under section 26A of the 1922 Act merely because there would be some loss of revenue. Note : The case was decided in favour of the assessee. CASES REFERRED TO R.K. Dhingra Co. v. CIT [1976] 102 ITR 643 (Bom.) and Murlidhar Kishangopal v. CIT [1963] 50 ITR 628 (MP). JUDGMENT Desai, J.—The question referred to us under section 66(1) of the Indian Income-tax Act, 1922, is as follows : "Whether, on the facts and in the circumstances of the case, the assessee-firm was entitled to registration under section 26A of the Income-tax Act, 1922?" In this reference, we are concerned with the…

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